Wealth can provide freedom, security and opportunity for your family. Money can help your kids and grandkids live richer and more fulfilling lives. It can give them the confidence and the resources to pursue their dreams. But putting money into the hands of unprepared family members can have the opposite effect.
We feel the Endowment Model is the best structure for our family. The perpetual trust protects our wealth from taxes and legal threats. But more importantly, it emphasizes self-reliance and individual achievement while at the same time providing support for family member ventures.
The Family Council is a group of family members that make executive decisions for the family as a whole. The Family Council determines the success or failure of your legacy over time. The Family Council creates and manages all the other soft structures that you will learn about in this report. Within the trust framework that we recommend the Family Council also manages all distributions from family assets. This makes the Family Council the lynchpin of your family office structure.
Just like a successful business, successful families need a mission statement that everyone can get behind. Drafting the Family Mission Statement should be the first task of your Family Council. The Family Mission Statement should motivate your family members to want to be a part of the family office project. All the other soft structures you put in place should center on this document.
Business-owning families and families who have Family Councils where cousins are involved may need to expand their mission statement into a Family Constitution. Small first generation families may not need a Family Constitution. But as your family grows…and circumstances become more complicated…a Family Constitution can clarify issues and provide the “glue” to keep your family together.
The Investment Committee is a group of family members – and sometimes non-family experts – that manages your family’s investment portfolio. It reports to the Family Council. Investment committee members should have at least some background in finance. One family member – typically the wealth creator – should be the wealth strategist. This person should have the most experience of investing and be capable of directing the overall strategy.